Many of us dream about starting an ecommerce business, but the realities of building an online store can be daunting.
In this article, you’ll discover each step in the process of starting an ecommerce store, and when to expect profit.
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Start an ecommerce business in 5 steps
- Find product opportunities and choose what to sell
- Thoroughly research your competition and write a business plan
- Choose a logo and name and set up your online store
- Choose your shipping strategy and set sales and marketing goals
- Launch your business
1. Find product opportunities and choose what to sell
Finding a product to sell
The first step to building an ecommerce store is knowing what products you want to sell direct to consumer. This often is the most challenging part of starting a new online business. In this section, we’ll highlight strategies you can use to find products with great business opportunities, explore the best places to find product ideas, and look at trending ecommerce products to consider.
💡 Learn more: What is Ecommerce: A Definition and Guide with Examples
Evaluating your idea
Once you have an online business idea, how do you know if it will sell? In this section, we’ll cover a few approaches that active entrepreneurs have used to validate their product ideas and potential markets.
Obtaining your product
After landing on a solid product idea, your next step is figuring out where and how you’re going to obtain your products. The next four posts cover the various methods for acquiring your products, along with the pros and cons of each model.
Sell your retail products online
Many independent retailers face a challenging road ahead. Shifting your brick-and-mortar business online can help you weather this storm, generate cash flow, and build a more resilient business model. You’ll need to find a good ecommerce solution to build your store on, like Shopify.
2. Thoroughly research your competition and write a business plan
Research your competition
You’ve found your product, evaluated its potential, and sourced a supplier. Before you get into that, you’ll need to thoroughly research your competition so you know what you’re up against and how you can differentiate your business model from theirs.
Writing a business plan
With your competitive research complete, it’s time to write your business plan. A business plan is a roadmap that helps bring your ideas and thoughts together. It’s vital in determining what to prioritize, especially if you plan to run your online store as a side hustle. A business plan also highlights your company’s mission statement to show investors and employees the core values of your brand.
3. Choose a logo and name and set up your online store
Choose an online business name
Aside from finding actual products to sell online, another challenging decision is determining your business or brand name and choosing an appropriate and available domain name. This blog post will help you tackle these important tasks.
Creating a logo
Once you’ve selected a memorable name and registered a corresponding domain, it’s time to craft a simple logo. In these resources, we’ll show you several options for creating a great logo for your new business.
Understanding search engine optimization (SEO)
You’re almost ready to begin building your online store. However, before you jump into it, you should understand the basics of search engine optimization so you can properly structure your site and pages for Google and other search engines.
Building your store
With a better understanding of search engines, it’s time to build out your store using a website builder. There are many crucial elements to consider. Below, we’ve listed our essential reads to help you build high-converting product pages, write captivating product descriptions, shoot beautiful product photography, choose your ecommerce color palette, and much more.
Don’t forget, if you run into any problems getting your store set up, you can always hire help from Shopify Experts.
Choosing your sales channels
One of the best ways to reach new customers is to choose sales channels where they already shop. The right mix of sales channels will depend on your products and your target market, but there are a number of great options that can complement and support your self-hosted store.
4. Choose your shipping strategy and set sales and marketing goals
As you get close to the launch of your new business, there are several shipping and fulfillment elements you need to prepare for. In this section, we’ve curated a few comprehensive guides on how to determine your shipping strategy.
It’s also a good idea to define your key performance indicators upfront so, once you launch, you know what measures of success to track.
As a final checklist, this post covers the most essential things you need to do before launch:
5. Launch your business
Acquiring your first customer
Now that you’ve launched, the hard work of marketing your products begins. While many new store owners should consider selling their physical products in person, the rest of digital marketing relies on doing one thing well: driving targeted traffic. Next, we’ll share a variety of marketing tactics that will help you in your first months.
Marketing your store
You’re well on your way now and likely have a few sales under your belt. It’s time to get serious and invest in marketing your store. The following posts will help you zero in on your top-performing ecommerce marketing tactics or expand into new ones for driving traffic and converting that traffic to sales.
Email marketing essentials
Driving traffic from social
Driving traffic and conversions from paid ads
Optimizing for higher conversion rates
Using analytics to uncover insights
How much does it cost to start an ecommerce business?
Starting an ecommerce business costs as little as $100, which is spent on a subscription and purchasing a theme for your store. Ecommerce companies cost less than brick-and-mortar stores because they don’t require the same amount of licenses and permits, and you don’t need to pay rent for a retail space.
If you operate as a dropshipping business model, for example, it’ll likely cost less to start because you don’t need to pay for raw materials, inventory, or manual labor. You only pay for products after a customer purchases them. If you’re creating your own products by hand or working with manufacturers, you’ll need to pay for equipment, materials, and labor upfront.
Many ecommerce entrepreneurs learn how to start a business on a shoestring budget. To get a better idea of upfront costs, we surveyed 150 entrepreneurs and 300 small business owners in the US to find out.
According to our research, new ecommerce store owners can expect business costs to total up to $40,000 in the first year, which is paid back to the owner through profit margins.
Expense categories include:
- Product: raw materials, inventory, supplier, manufacturing, patents, etc.
- Operating: incorporation/legal fees, additional software, business insurance, accounting, etc.
- Online store: website/platform subscription, hosting/domain, contract developer/designer, etc.
- Shipping: packaging, labels, etc.
- Offline: stall/table fees, rent, gas, etc.
- Team/staff: salaries, benefits, perks, etc.
- Marketing: logo, branding, ads, printed materials, business cards, etc.
In the first year, business owners spent:
- 11% on operating costs
- 10.3% on marketing costs
- 9% on online costs
- 31.6% on product costs
- 8.7% on shipping costs
- 18.8% on team costs
- 10.5% on offline costs
Now, this doesn’t mean you will definitely spend $40,000 opening up your ecommerce store. The amount spent in the first year varied significantly, depending on industry and ecommerce business model, whether the business had employees, or if it was a full-time gig.
You also don’t need to find $40,000 in cash before you can begin thinking about how to start an ecommerce business. While many (66%) entrepreneurs use their personal savings to fund their business (respondents could choose more than one funding source), they also used financial support from friends and family (23%) and personal loans (21%).
5 tips for starting an ecommerce store
Starting an ecommerce business is thrilling. Whether you’re starting your first one or your fifth, keep the following tips in mind:
- Forget about year-one profitability
- Know your target audience
- Sell an in-demand product
- Experiment with marketing and advertising
- Invest in outreach and link building
1. Forget about year-one profitability
The project of starting an ecommerce business is a marathon, not a sprint. Don’t measure business success by profitability in your first year. Give yourself a runway of 18 to 24 months for your business to get off the ground. Spend your first year testing, reiterating, and reinvesting your sales back into your business using the above budget guidelines.
2. Know your target audience
Outside of developing or sourcing products, you’ll spend a majority of your time getting the attention of customers. The challenge? You want to get your products in front of the right customers—the ones who will actually buy on your site. Understanding these people, a.k.a. your target audience, can help you reach them faster and make more sales.
💡 Read more: Finding Your Ideal Customer: How to Define and Reach Your Target Audience
3. Sell an in-demand product
Create or sell an amazing product with proven market demand. Take a look at the top retailers today—Allbirds, Tushy, Bombas—and you’ll notice they all sell top-tier products. “Product quality is critical because a good product sells itself,” says Eric Even Haim, CEO of upsell and cross-sell app ReConvert. “When you marry a great product with an audience who’s hungry for it, your marketing becomes 10 times easier.”
Eric explains that new products don’t need to be the “next big thing.” You just need to look for growing trends and markets where customers are underserved.
“Then step in with an excellent product and give them what they want,” Eric says.
Two places to find market demand are:
- Google Trends, where you can research topics people search for
- Trends.co, which uses data to predict trends and business opportunities before they become popular.
4. Experiment with marketing and advertising
It’s important to get the word out about your new business after launch. You’ll want to try different marketing strategies to understand where your audience hangs out and best responds to your content.
Test different online marketing tactics like:
- Affiliate marketing
- Instagram ads
- Website pop-ups
- Checkout upsells and cross-sells
- Organic search
- Content marketing
- Loyalty programs
“Success depends on your ability to experiment, test, and analyze your ad and marketing strategies,” says Stephen Light, CEO and co-owner of mattress company Nolah. “Experimentation is the best way to avoid falling into any assumptions about your audience that could end up hurting you rather than helping.”
Stephen suggests being open to getting things totally wrong, especially when you’re just starting out. Use the data you collect to create more effective campaigns that drive traffic and profit.
“Plus, optimizing your ad campaigns and gathering data regarding how your customer base responds to them can help you shape your website’s features,” says Stephen.
5. Invest in outreach and link building
Another tip for new ecommerce stores is to have an outreach and link-building plan in place. These tactics can help boost your SEO rankings in Google.
“The sooner you have an approach to link building and driving authority into your site in place, the sooner search engines will recognize your website as an authority in its niche,” says UK-based SEO consultant James Taylor.
“Search engines see a link from an authority source as a vote of confidence towards your website, so the more links you have from trusted websites, the more search engines are going to trust you as an authority.”
James recommends new ecommerce store owners and marketers invest in digital public relations and link-building campaigns early on. This sets the stage for long-term SEO success, so you can rank higher in Google, earn more organic traffic, and make more sales.
“The sooner you have an approach to link building and driving authority into your site in place, the sooner search engines will recognize your website as an authority in its niche.”
Start your ecommerce store
Building your own successful ecommerce business is as exciting as it is challenging. You’ll learn about choosing a product, evaluating its viability, figuring out how to get it produced, building an ecommerce website, and marketing and selling to new audiences. At times, you may feel like you’re solving a head scratcher of a puzzle, but it’s rewarding all the same.
We hope this ecommerce business guide provides you with a roadmap on your journey. As always, the best advice anyone can give is to get started and enjoy yourself along the way.
Illustration by Cornelia Li
Ecommerce business FAQ
What is ecommerce business?
Ecommerce is the buying and selling of goods or services online. Ecommerce business is conducted through an ecommerce store or online marketplace, social media, or a mobile app. Ecommerce enables businesses to offer convenient shopping to a global audience.
How to start an ecommerce business?
Research what products you’d like to sell or can source to sell, select a business name, register your business with the government, obtain permits and licenses. Then choose an ecommerce software and create your website, load your products onto the site, launch, and start marketing your business.
What are the 4 types of ecommerce businesses?
- Business to consumer (B2C): When you sell a good or service to an individual consumer (e.g., you buy a jacket from an online retailer).
- Business to business (B2B): When you sell a good or service to another business (e.g., a business sells wholesale products for another business to use).
- Consumer to consumer (C2C): When you sell a good or service to another consumer (e.g., you sell vintage clothes on Facebook Marketplace to another consumer).
- Consumer to business (C2B): When you sell products or services to a business (e.g., an influencer or affiliate offers exposure to their audience in exchange for a fee).
How to start an ecommerce business?
Research what products you’d like to sell or can source to sell, select a business name, register your business with the government, obtain permits and licenses. Then choose an ecommerce software and create your website, load your products onto the site, launch, and start marketing your business.
Is ecommerce a profitable online business?
Yes, the ecommerce industry is profitable. Successfully starting an ecommerce company is a marathon, not a sprint. It can take 18 to 24 months for your business to get off the ground. It’s critical that you don’t measure the success of your business by your first-year profitability.
Is it hard to start your own ecommerce business?
No, starting an ecommerce company is easy, with platforms like Shopify enabling brands to go online in just a few days. Starting a brand consists of hard work and continual market research to improve your business. We encourage you to read our guide on how to start an ecommerce business before you set up a store.
